Bedroom Tax: A Letter Everyone Should Read

[SameDifference]

samedifference1.com/2013/02/10/julia-jones-bedroom-tax-letter-to-david-cameron/

[aufaniae]

"The government faces the same market forces in building new housing as the private sector. So it's not just a case of a good investment. It's a subsidy."

Saski you are having real problems with the maths here. You seem to think the government is building houses and then giving them away!

Building council housing is an investment for the tax-payer. The cost of building the house is paid many times over by the rent over the years, and the government still owns the asset.

In fact, someone living in council housing, and paying their rent out of wages will be paying more money into the public purse than many people living in their own homes. So council tenants could well be subsidising you!

[aufaniae]

stephrick

"As far as I know if you are a council tenant and have a larger house than your requirements they have to offer you and alternative."

There is a massive shortage in council housing. Vast numbers of "over-occupied" tenants are not being offered smaller properties to move into, as they don't exist.

They will be hit by the bedroom tax regardless.

Yes, lots of people will be made homeless because of this.

[stephrick]

they really need to invest, it's £500 a month roughly for a council house, so not overly cheap, private is £650 a month. I would rather my rent be paid to the council, it would allow me spend more, helping the economy.

[Saski]

"The government faces the same market forces in building new housing as the private sector. So it's not just a case of a good investment. It's a subsidy."

Saski you are having real problems with the maths here. You seem to think the government is building houses and then giving them away!

Building council housing is an investment for the tax-payer. The cost of building the house is paid many times over by the rent over the years, and the government still owns the asset.

In fact, someone living in council housing, and paying their rent out of wages will be paying more money into the public purse than many people living in their own homes. So council tenants could well be subsidising you!

I think you'll find my math is spot on.

Google opportunity cost.

If the taxpayer invests say, 10GBP in social housing and this is rented at 1/year by the council instead of the prevailing market value of 2/year, then the 1 differential is a subsidy. The taxpayer could invest his 10 in an investment fund and reap a higher return than government housing. It doesn't matter that council housing isn't free; if it's renting it for less than market value, then it's a subsidy.

[SaskiaRembrandtVampireHunter]

With reference to council housing, market forces and subsidies - given the age of most council housing stock, it is likely to have paid for itself many times over. In this area - council housing stock consists of pre-1920s mining cottages, which were built by the coal board and sold on to local councils (at a very low rate per house) in the 1960s. Therefore, removing the cost of repair and maintenance, any rents collected go straight back into the public purse. AKAIK, the situation is similar in most of the north, where council housing came from local industries.

Arguing that low rents are equivalent to a subsidy is a bit of a strawman argument. As has already been mentioned in this thread: the system of low rents and secure tenancies in the social sector should be the norm. The private sector is out of step with what people actually want and need and should be regulated, as it is in other parts of Europe.

[SaskiaRembrandtVampireHunter]

Saski The situation with non-doms in London sounds similar to those with holiday homes in rural and coastal areas.

[LittleTyga]

This is what Westminster are doing to those who can't afford the extra rent

It's a freaking joke - this policy has achieved nothing except costing the tax payer more and disrupting families for political posturing - tossers :(

[Saski]

How is it a straw man argument? I'm genuinely baffled over that. Low-cost social housing is a subsidy.

I'm not even really arguing against it, I'm just pointing out that it is a transfer of wealth from taxpayer to tenant - and it will remain a contentious issue. I'm surprised by the number of people on this thread who support of social housing, but are unwilling to concede that it is in fact a subsidy. It doesn't matter if council housing pays for itself; what matters is whether the return on investment rivals the prevailing market rate for similar investments. Or an even easier hurdle to clear in 2013; the rate on a homeowner's mortgage.

[aufaniae]

Saski, no you are still not getting this.

The figure that matters is how much the council actually paid to build the house. Once that's paid, any more money, over and above running costs and maintenance is profit for the tax payer.

It's irrelevant how much the market value of private housing is, that's not part of this equation and has no bearing on whether the tax payer is making a profit out of the scheme or not!

[JakeBullet]

I don't care two hoots if social housing is or is not a subsidy.....not did I care two hoots when I had a mortgage and my own place.

All I know is that I am bloody grateful it exists as without it I would be homeless now.

Lets stop bickering over whether its subsidised or not and be grateful we have it and pissed off about the lack of it for too many other people.

Finally, when my marriage broke down and I had to move 200miles back to my old town I was housed on the local sink estate...the type of place where nobody wants to live. I got it as it was all they has......it had three bedrooms and at the time I was in full time work and paying rent.

Four years in I am now in a two bedroom house as DS is autistic and I needed an enclosed garden where he could have safe access to the outside.


IF I was in the old sink estate flat this bedroom tax would affect me as I am now on full housing benefit. I would not be able to move as nobody wants to live there (and I had the neighbour from hell). Nor did I really have any say in having been allocated it so would be stuck with this loss of income without being able to do anything about it. I can tell you I would be mightily pissed off.


Don't get me started in those with disabled children being penalised under this change. It is an attack on the poorest members of society....it won't free up housing as most of the single occupants of there bedroom + homes are elderly and they will not be affected.

[Saski]

aufaniae, how did you get to decide that the taxpayer's money has no opportunity cost?

What's your discount rate for the return on investment - i.e. for determining when you've broken even?

[DoFliesHaveKnees]

Can I just add to the mix that the government is not actually telling people to put kids into tiny rooms with each other etc. They are saying the tenants will get a reduction if they are under occupying the property. If you have 2 x 14 year old daughters, for example, they will under the rules, be expected to share, but if you have 2 bedrooms for them, they can still use them! It just means you get a reduction in your eligible rent. Also, if you require a bedroom for a carer to stay overnight, you will not have any deductions from your eligible rent amount.

[LittleTyga]

It doesn't matter that council housing isn't free; if it's renting it for less than market value, then it's a subsidy.

I don't agree with this - even less so when the market value is so distorted. Lack of supply has pushed up prices out of most families reach so that Housing Benefit has to top up many peoples rent. Prices are extortionate - building more houses will inevitably lower the cost of housing for everyone - for those renting, buying and ultimately the HB bill will be lowered if people are then able to pay there own living costs.

Building more social housing can only be seen therefore as an investment in the long term.

[aufaniae]

"I'm just pointing out that it is a transfer of wealth from taxpayer to tenant"

Do you mean council housing or housing benefit?

When housing benefit is paid for social housing, the money is going back to the tax payer, no transfer of wealth there.

Or if you're talking about council housing, when a tenant gets a cheaper rent than a private property, all that means is that they are getting a better deal. It's not a transfer of wealth.

The big transfer of wealth is housing benefit to private LLs. That's a scandal IMO.

Why do you see the market rate as the "real" value btw?

A government LL is different to a private LL. If they don't house people, there are all sorts of other costs they must bear as a result of people being homeless. A private LL doesn't have to worry about these costs. As well as making money directly from the social housing schemes, governments / the tax payer save money when their population is properly housed (as the population generally have better health, don't need emergency housing, have better prospects and so pay more tax, commit fewer crimes etc).

A government must take all sorts of things into account to find the "real" value of something. The market value is something an investor can take as a yardstick for whether something is a good investment for them. Not so a government, they have to look at a much bigger picture to get the "real" value to the tax payer.

[Sarahplane]

It's a fucking stupid idea, it's going to cause massive problems. We definitely need more social housing rather than less and I think the government needd to recognise as well that children may require a room at both parents homes if the parents are separated and the children split there time between both parents. Also imo not allocating a room for foster children is madness.

Housing benefit legislation does now allow a bedroom to be allowed for use by a carer who lives elsewhere but stays regularly and also thanks to a recent legal case disabled children who cannot share can be allocated their own room when working out how many rooms are needed. The own room for some disabled children rule is very new so maybe not very well known so worth pointing out to housing benefit staff if anyone is in that situation.

Many councils have also set aside dhp funds to help foster carers as the last thing any council wants is to loose foster carers so while not guaranteed there is a pretty good chance of getting it long term.

I'm pointing these things out to try to reassure people and also so people know what they can apply for not to diminish very valid points about what a stupid, unfair law it is. The bedroom tax is an awful idea and mp's need to be told this by everyone as mp's are the ones with the power to change this.

[Viviennemary]

I don't think many councils make much money out of rent. Repairs and maintenace cost more than the rent covers. And very few people pay full rent in any case. I think most councils were quite pleased to get rid of their council houses and couldn't wait to sell them. The solution is council houses for people in need and who have low incomes. And not one person sitting in a four bedroomed house for the rest of their life. And people quite able to afford their own house should not be eligible to keep their council house. That would free up enough properties for those in need.

[SaskiaRembrandtVampireHunter]

Saski Why it is a strawman argument has been explained by aufaniae

[aufaniae]

"And people quite able to afford their own house should not be eligible to keep their council house. That would free up enough properties for those in need."

That's one of those things which might make sense for a minute or two when you see it on paper. But have a think about what it means in reality for the people involved and society too and you'll see it's a terrible idea.

For areas where there is a lot of council housing in one place, if people with jobs have to move out, those areas will quickly become ghettos with no role models in work.

If people are forced to move on it will destroy communities.

It will create a bigger burden on the state in terms of caring responsibilities if people move away from neighbours and family they perform informal caring for. (What happened to the big society?!)

It's a ridiculous reverse incentive for people to get jobs if, when they do they will lose their home, and all the upheaval that goes with it e.g. uprooting DCs.

If there is a problem with supply, why not build more?!

[SaskiaRembrandtVampireHunter]

"I don't think many councils make much money out of rent. Repairs and maintenace cost more than the rent covers. And very few people pay full rent in any case. I think most councils were quite pleased to get rid of their council houses and couldn't wait to sell them."

Do you have any evidence for this?

[SaskiaRembrandtVampireHunter]

To put it another way: do repairs and maintenance on your house cost more than your rent or mortgage Viviennemary? That's not how it works for me, or anyone else I know - apart from people who live in do-er-uppers - so why would it be different for social housing?

[edam]

'I think most councils were pleased to get rid of their council houses and couldn't wait to sell them' - you must be thinking of the scandal in Westminster during the reign of Shirley Porterof Homes for Votes fame. That nice Tory lady who was caught gerrymandering - getting rid of council houses because she thought they encouraged labour voting. She was found to have acted illegally, was charged £27m for her wrong-doing, but fought it all the way and only forked out £12m. No doubt the current government are champing at the bit to adopt her shameful policies of dumping homeless families in abestos-ridden fleapits...

[edam]

(She was also the Tesco heiress. I'm not saying there's any link between passing off dodgy horsemeat as beefburgers and exploiting the poor and the taxpayer but it makes you wonder...)

[LittleTyga]

I don't think many councils make much money out of rent. Repairs and maintenace cost more than the rent covers. And very few people pay full rent in any case.

Getting your information from the Daily Mail by any chance?

I know a lot of people who live in HA and council homes - all of which work and pay full rent, most of the repairs are done by them too as the council don't do work to a good standard. I know families who have put kitchens and bathrooms in at their own expense.

[Darkesteyes]

In Little Tygas link. I know its a small point in the scheme of things but can you imagine the knock on effect on the NHS when their chlolesterol levels have skyrocketed due to eating takeaways every day.

[SaskiaRembrandtVampireHunter]

Also the knock-on effect on police and social services when people are forced to live in such overcrowded conditions.